Gold prices correct weekly and daily pulses. The focus of investors and traders is on the US dollar and the Federal Reserve’s decision. The 50% average reversal and 38.2% Fibonacci retracement for the yellow metal are in focus, according to market analyst Ross J Burland.
Dollar index slipped slightly from its peak
Gold prices remain flat and stay within the last supply’s bullish correction. The US dollar is under some pressure to start the week that gives the bulls an opportunity in the yellow metal. cryptocoin.com As you follow, the markets are waiting for the FOMC meeting on July 26-27. The dollar was subject to a rethink in Federal Reserve sentiment as the Fed turned down a 100 basis point rate hike. As a result, the dollar fell below 107 on Monday, according to DXY. It climbed as high as 109.29 in a fresh bull cycle last week.
A number of economic measures have contributed to the hawkish bias among Fed speakers. First, US inflation rose to 9.1% in June from 8.6% in May. This marked a new four-year high. It surprised the upside once again, with both headline and key measures. This and other data supports global interest rates. It also sent the dollar higher in a bull cycle.
TD Securities: Dollar will remain king of FX
At a news conference following the FOMC meeting in June, Chairman Jerome Powell said the Fed would need “compelling evidence” that inflation was easing for it to change course. He described it as ‘a series of falling monthly inflation data’. “Everything is fine,” Fed’s Raphael Bostic has since said. Also, Mester said there was no reason for a smaller increase. San Francisco CEO Mary Daly noted that 75 bp was the ‘most likely stance’. TD Securities analysts comment:
There is no other way around this. The Fed has an inflation problem. That’s why USD will continue to be the king of FX.
“Gold prices defy pre-pandemic levels”
TD Securities analysts say gold prices have now crossed the trend reversal threshold, confirming a bear market trading regime in the yellow metal. ChartVision Trend analysis shows that a break below the $1,821 level by September will create a bearish trend in the yellow metal. In this context, analysts share the following predictions:
Gold beetles fell like dominoes. It also broke various support levels as prices have since been heading towards $1,600. Prices are now challenging pre-pandemic levels. So the largest speculative group underneath will start to feel the pain under a hawkish Fed regime as entry levels are tested.
Finally, analysts say that, given the latest CFTC report, the prop-trader cohort continues to have an extremely large position size, despite a large amount of long trades last week. In this context, analysts say:
Therefore, in the ‘liquidation vacuum, these major positions are the most vulnerable. This indicates that the yellow metal continues to be more bearish.
Gold prices technical analysis: There could be a bullish correction on the cards
From a weekly perspective, a bullish correction is on the cards, according to market analyst Ross J Burland. In this direction, the analyst draws attention to the following levels:
We have drawn the Fibonacci retracement scale in the chart below to show the possibility of decreasing price imbalances relative to the gray areas meeting the fibs. However, monthly lows of $1,676.86 can be reached sooner or later as the chart shows.
